The idea that enterprises could use a public blockchain network is usually met with a lot of skepticism and raised eyebrows by the senior executives in Fortune 500 company boardrooms. Most of the time, engineers and product owners are even scared to mention any of the public blockchain networks as a viable protocol when designing future solutions. This is all changing now due to the efforts by Ernst & Young, one of the Big Four accounting firms in the world, which just recently held an online conference called EY Global Blockchain Summit 2020 I Going Public, where it disclosed the important work they are doing in the public Ethereum space.
In this three-day event, led by EY Global Blockchain Leader Paul Brody, the audience was presented with information about the latest Ernst & Young blockchain initiatives and partnerships they have established with industry leaders like DELL Technologies
First, let’s acknowledge that this was the first enterprise blockchain event conducted completely online and livestreamed on YouTube. More than 50 guests attended. The way the event was organized and handled was very professional and speaks a lot about the people behind it. In our current COVID-19 environment with quarantines and enforced social distancing, this will be the only way to do conferences going forward.
One of the most interesting sessions was the keynote delivered by Paul Brody where he explained the current environment, how EY have started on their blockchain path, what has been accomplished so far with the releases of EY OpsChain and EY Blockchain Analyzed and what is the road ahead. He very skillfully articulated why private blockchains will not succeed in scaling and creating network effects and presented his case on why public networks will bring the needed upside for Fortune 500 companies.
The whole idea of the transition from private to public networks is to eliminate the vendor-consortia lock-in, to potentially lower your total cost of ownership (TCO), and to be able to scale in-network effects without needing a new R&D department to manage the new blockchain stack. These goals sound very promising and nice but the path to get there can be challenging as enterprises are struggling to feel comfortable with the existing compliance rules and regulations and to overcome their fear of exposing their private data and assets.
In the center of EY’s public Ethereum efforts is Baseline, the initiative that was started just a month ago with the help of ConsenSys, a large Brooklyn-based Ethereum-focused company, and Microsoft. Baseline has the goal to enable enterprises to work together without disclosing their private and sensitive data while leveraging the public Ethereum as a middleware for “baselining.” This is possible by replacing the actual data with mathematical proofs of that data based on cryptography methods called zero-knowledge proofs.
Baseline is an amazing and much-needed effort by and the initiative is supported also by several of the key blockchain companies including Chainlink, Unibright, MakerDAO and Splunk, among others. It will push the conversations on the risks of using a public network for enterprise processes further and will give insights on what will actually work long-term. For example, creating Baseline so tightly coupled with Ethereum has several strengths and weaknesses. A key strength is that the Ethereum Foundation, ConsenSys and Enterprise Ethereum Alliance (EEA) are ready to invest funds and allocate resources. Also, the availability of Solidity-skilled developers and already existing public libraries to work with Ethereum will make any future efforts easily planned and executed.
On another hand, an important weakness is the tight integration with only one protocol and if Ethereum or its future version Eth2.0 is not the success everyone hopes for, it will be a big turn-off for any enterprise considering using it now. Ideally a middleware service should be able to connect and work with other blockchain protocols as well in order to ensure long-term availability and not be locked into using only Ethereum. We don’t want to eliminate vendor lock-ins with protocol lock-ins. Then the unpredictability of Ethereum gas-transaction fees also is not helping but techniques like transaction batching could mitigate those risks to certain extend. At the end of the day, an enterprise won’t wait for the next CryptoKitties dApp to unclog the Ethereum network in order to process an important transaction.
The reality is that any of the large enterprises that are targeted as a potential user of Baseline won’t just leave their existing cloud or on-premise tech stacks and fully adopt a new technology, but blockchain should be approached where it is applicable and as a complementary, add-value proposition.
Regardless of the risks, Ernst & Young’s commitment to using the public Ethereum network is strong and even their flagship blockchain-enabled service OpsChain, which has been used for food and beverage traceability, drug and medical supply chain, shipping and logistics, fund management and financial transactions and labor management, has its latest version 4.0 specially build on top of Baseline.
It brings confidence to see that EY came forward with their solid team of blockchain experts, architects and developers publicly speaking about their work on the public Ethereum blockchain. This is in sharp contrast to the usually siloed approach and handling of business for the rest of the large consulting firms. Still, working with a public blockchain network will need more than Baseline in order to succeed: it will require a set of new regulatory frameworks and stable blockchain protocols with established interoperability services between them. We will get there very soon and it is positive that the first steps have already been taken.